Chemical Finance Digest, April 25-29
8:44 AM MDT | May 4, 2011 | By VINCENT VALK
Editor's note: This is our new round-up of major financial and economic news that affects the chemical industry. If you have any questions, comments, suggestions or tips please email Vincent Valk at firstname.lastname@example.org.
Continued strong earnings have topped the headlines for the week. Here's a scorecard for selected chemical companies. Click the links to see our full stories:
Aside from earnings, Momentive Performance Materials is planning an $862.5 million IPO, the only big equity announcement of the week. The deal would be the largest chemicals IPO since Petronas Chemicals in November.
While Momentive plans to issue shares, DuPont is buying them back. A $2 billion share repurchase will kick in as soon as the $500 million left on the company's current program expires.
In M&A, AkzoNobel announced plans to sell ICI Pakistan's chemicals business. The size of the planned deal has not been announced, but the business had $453.6 million in sales last year. AkzoNobel will retain the paints segment of the business, however.
No new debt was issued last week. Moody's did raise Momentive's credit outlook to positive – oddly, the ratings agency didn't mention the IPO, but cited higher demand as the reason for the move. S&P also raised Mosaic's credit rating one notch, to 'BBB.'
In macroeconomic news, U.S. GDP was up 1.8% in the first quarter, a big drop for the fourth-quarter of 2010. But the number "was not as bad as it looks on the surface," says IHS Global Insight chief U.S. economist Nigel Gault. "Other indicators of growth—such as manufacturing production, business surveys, and employment—suggest that the economy had more underlying momentum in the first quarter than the 1.8% headline number implies," Gault says.
The Chicago purchasing manager's index (PMI) fell in April, to 67.6. Still, that's a historically high level and it "indicates expanding economic activity for the nineteenth consecutive month," says ACC chief economist Kevin Swift.
Looking at the week's other headlines, embattled former Berkshire Hathaway exec David Sokol scouted three chemical companies before settling on the Lubrizol deal that landed him under suspicion for insider trading. Beyond CW, The Economist says that the U.S. is "still full of ideas, but not making jobs."
Speaking of jobs, the week ahead will bring April's U.S. employment report, and more earnings, including Huntsman on Thursday and BASF on Friday.
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